These submissions were reviewed by the bank’s team and validated by the DIPP on a real-time basis. The states were ranked on six key reform areas, including single-window systems, tax reforms, construction permits, environment and labour reforms, inspection reforms and paperless courts for commercial disputes.

This year the average rate of implementation has been 48.93 per cent, an increase from last year’s rate of 32 per cent. 16 states implemented more than 75 per cent of the reforms, a significant increase on last year when not a single state achieved this result. While the assessment shows that states have progressed in making it easier to do business, there are a few interesting things to note.

First, Haryana, Telangana and Uttarakhand have improved their rankings by the most. Yet while the three states have done well implementing the six key reforms, they have fallen short in areas such as digitising land records at local municipality offices, integrating land record databases and judicial reforms pertaining to the filling of vacancies in district courts.

Second, though there is a correlation between investment rank and ease of doing business rank (EoDB), there is an outlier in the case of Karnataka. While Karnataka scored the maximum score in terms of investment, it ranked 13th in terms of EoDB with a score of 88.39 per cent. This is due to the state’s relatively slow progress in tax reforms and the single window system. Within Karnataka, Bangalore is the only city that seems to have attracted investment. This implies that the EoDB rank seems more holistic than the investment rank.

Third, it is interesting to explore the source of the high scores for Andhra Pradesh and Telangana. As expected, the south Indian states have done phenomenally well in terms of implementation of single window clearing and tax reforms. Active private sector participation and a focus on infrastructure in Andhra Pradesh and IT exports in Telangana have paved the way for this success. Yet Andhra Pradesh and Telangana were held back from achieving a perfect score by their poor performance in the land records data integration categories and in their failure to design and implement a system that allows for e-summons and digitally signed court orders for commercial disputes.

Chandigarh, Jammu, Kashmir, Meghalaya, Lakshadweep and the Andaman and Nicobar islands received the lowest scores. Their 0.30 score shows that the reform process is very slow in these regions. This is due to their governments’ unwillingness to prioritise the reforms. To speed up the process, these states and union territories require additional mentorship from the central government to learn from best practices adopted by other states.

While there is healthy competition among states, it remains to be seen whether Prime Minister Narendra Modi’s dream of ensuring India’s place in the top 50 countries will come true or not. Currently, India’s rank is 130 — a small improvement from last year’s ranking of 131. As mentioned by the country director of the bank, one size does not fit big and diverse countries like India. Instead, there is a clear-cut need to consider reforms undertaken across the country while calculating India’s position. At the moment only Delhi and Mumbai are included in the EoDB index for India as a whole. This is clearly an incomplete picture.

There is also a lesson to be learnt from this assessment. The results are based on an online dashboard created by the DIPP that updates rankings in real time when a response by a state is validated by the DIPP. This kind of real time data collection should be adopted for compiling other statistics such as employment data.

Overall, these results help states and union territories understand their comparative EoDB strengths and weaknesses and allows for reform recommendations to be in line with international best practices. But there is still room for improvement. Each reform recommendation should have a clearer vision of the end goal and this vision should be communicated to the states at the outset of the reform process so that there is a shared objective. The DIPP should also engage with state governments on a regular basis to agree on the next steps of the reforms and monitor progress so that their impact is felt on the ground.

Rajiv Kumar is Senior Fellow, CPR and the Founding Director of Pahle India Foundation and Palakh Jain is Senior Fellow, Pahle India Foundation.

A version of this article was first published here in The Financial Express.